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1
OLDFIELDS HOLDINGS LIMITED
ANNUAL GENERAL
MEETING
30TH NOVEMBER 2017
Board & Executives
• Lewis (William) Timms, Chairman
• Steve Hooper, Non Executive Director
• Richard Abela, Managing Director & CEO
• Greg Park, Executive Director, Co Sec. & CFO Slide 2
Order of Business
• Welcome and Introductions
• Chairman’s Address
• Chief Financial Officer’s Address
• Non-Executive Director’s Address
• Chief Executive’s Officer’s Address
• Items of Business
• Open Discussion
Slide 3
Slide 4
CHAIRMAN’S ADDRESS
Lewis Timms
CHAIRMAN’S ADDRESS
LEWIS TIMMS
2017 Financial Results
2017 $k
2016 $k
Change %
Group Revenue (Net) 26,721 28,420 -6.0%
R
Net Profit (Loss) after Tax 312 (722) +143.2%
Interest & DSLN Debt Revaluation Depreciation & Amortisation Income Tax Expense Foreign Exchange Gain
590 803 315 11
634 1,434 352 (37)
EBITDA 2,031 1,661 +22.3%
Slide 5
Slide 6 6
COMPANY SECRETARY & CFO
Greg Park
COMPANY SECRETARY & CFO
GREG PARK
FY17 EBITDA Movements Against Prior Year
Slide 7
Consumer Division
Net -$497k
Net +$495k
Scaffold Division FY16
$2,031k
$1,661k
FY17 Salaries & Other SG&A
Net Revenue Decline -6.0%
EBITDA Improvement +22.3%
Volume -$947k
COGS Savings +$186k
Logistics Savings +$264k
Volume +$286k
Operations Savings +$209k
+$372k
Review of Revenue (before trading terms)
FY14 FY15 FY16 FY17 17 v 16 Mov’t %
Sheds 3,371 2,726 1,839 1,807 -32 -1.7%
Paint 9,473 9,018 9742 6,751 -2,991 -30.7%
Consumer 12,842 11,744 11,587 8,558 -3,023 -26.1%
Scaffold 15,898 17,088 18,308 19,061 +753 +4.1%
Total Group 28,740 28,725 29,848 27,602 +2,246 -7.5%
Slide 8
FY14 FY15 FY16 FY17 17 v 16 Mov’t %
M10 House Brand 866 748 931 1111 +180 +19.3%
M10 Oldfields Brand 918 938 927 894 -33 -3.6%
Masters 2,172 2,374 2,841 274 -2,567
Specialists 5,517 4,958 5,043 4472 -571 -11.3%
Total Paint 9,473 9018 9742 6751 -2991 -30.7
2017 Cash Generation & Application
2017 $k
2016 $k
EBITDA 2,031 1,661
Working capital & provision movements 552 924
Interest & Finance Costs Income Tax Paid
(166) (273)
(255) (189)
Cash Provided by Operating Activities 2,144 2,141
Investing Activities (Net Purchase/Sale PP&E) Financing Activities (Net Repayment of Debt)
(736)
(1,136)
(626) (1,080)
Net Increase in Cash 272 435
Slide 9
Deferred Senior Loan Note (DSLN)
• Instrument with Westpac created Dec. 2012
• Expires Dec 2022 (10 year agreement)
• Group swapped $8.0m of Westpac debt for $2.4m DSLN
• DSLN is interest & debt instalment free till Dec 2022
• DSLN comes with restrictions & impacts: – Implicit interest rate of 12% pa compound
– Reapply each year for bank facilities ie Core Debt & O/Draft
– Annual negotiation of 12 months debt repayment plan
– Limit set on fixed asset acquisitions
– Bank control of dividend distributions + proceeds from asset sales
Slide 10
DSLN – Interest Calculations
• Years 1–5 : Interest at 12% pa compound
• At Dec 2017 provision approx $1.8m Interest calculation used for determining “payout” figure if extinguished inside first 5 years
• Years 5–10 : Redemption premium replaces interest calc.
• Sliding scale premium determined by share price (15day VWAP)
Share Price Premium Redemption Date Impact to P&L
10.0 c & below (collar price) Nil W/back of all accrued interest
11.0 cents ie +1.0 cent $250,000 W/back $1.8m less $250k
17.3 cents $1,820,000 No back of interest ($1.8m-$1.8m)
30.0 c & above (cap price) $5,000,000 Additional $3.2m ($5.0m=$1.8m+$3.2m)
Slide 11
DSLN Planning & Options
• See out remaining 5 years. i.e. pay Westpac $2.4m +Redemption Premium on 21 Dec 2022
…. Carries funding implications to pay lump sum on 21 Dec 2022
• Seek new financiers to payout DSLN …. Appetite of Lenders? … Requires approx $5.0m to Payout / Facilities
• Capital raising approx $2.5m to payout DSLN … Amt may vary subject to upwards movements in share price … Requires balance of bank facilities to be renegotiated
• Capital raising approx $5.0m to payout DSLN & all Bank Facilities
… Amt may vary subject to upwards movement in share price
Slide 12
Slide 13 13
SUPPLY & LOGISTICS REVIEW:
STEVE HOOPER
Non - Executive
Director
Operational Focus in 2017-2019
• Strategic engagement of key suppliers as business partners – international and local
• Focus on quality, product development and new product research – Pro Series Brushes
• Rationalisation of suppliers, sku’s and processes to reduce product and overhead costs
• Warehouse consolidation in Sydney to support changes in consumer products and scaffolding
• Identification of key business processes that require enhancement – warehouse management, inventory control and equipment maintenance
Slide 14
Slide 15 15
COMPANY SECRETARY & CFO
Greg Park
CHIEF EXECUTIVE OFFICER
RICHARD ABELA
Performance Summary – FY17
Net Revenue
Net Profit After Tax
EBITDA SG&A
Sales, General & Admin’ Exp’s
Core Debt
Net Borrowings excluding DSLN
+3.8%
$26.7m
$28.4m
$27.4m
$27.2m
+143.2%
$0.3m
$(0.7)m
$(1.1)m
$(2.6)m
+22.3%
$2,031k
$1,661k
$1,165k
$777k
Reduc’n 5.0%
26.4%
27.8%
30.6%
34.2%
Repay $1.2m
$0.9m
$2.1m
$3.5m
$4.6m
Slide 16
FY15
FY14
FY17 vs FY16
FY17
FY16
Strategic Direction
Slide 17
Grow
th &
In
nova
tion
Peop
le &
C
ultu
re
Oper
atio
ns &
Su
pply
Cha
in
is ONE Company focussed on becoming market leaders by;
• Understanding and engaging with our customers to meet and exceed their goals • Inspiring our people to deliver strong profitable growth, innovation, quality products and services and • Continuing to build on our Brand foundations and Company values
Accountability – Customer Service – Innovation – Integrity – Passion – Safety & Sustainability
• Developed a deeper understanding of our market position
• Development of counter cyclical revenue streams
• Focus on channels to market that will diversify income streams.
• Liberate the collective knowledge and goodwill around cross border customers.
• Open up new opportunities / capacity by installing cross hire strategy.
• Focus on further developing international channels
• Focus on key data including pipeline, win/loss analysis and strategic targeting.
• Reintroduction of innovation.
Key strategic planks - Scaffolding
• Homogenised market -true differentiation opportunity
• Focus on trade – Respect quality and rebuild brand loyalty
• Restructure the revenue base to improve margins
• Key leadership – drive team and industry !
• Focus on innovation
– Return to true product life cycle management
– Launch the best brush for painters on the market
• Re-engage painters
• Gain critical mass + profit margins
• Rationalised the number suppliers
Key strategic planks - Paint
• Simplified offer
– No custom sizes, popular colour options only
– On-line strategy
• Produced for stock not to order
• Remove unprofitable distributor network and reclaim margins
Key strategic planks - Sheds
• Move to a direct sales strategy being a predominantly on line model
• Strip out costs by redeploying staff that can be returned to production on a batch basis
• Re-establish critical mass
• FY18 evaluation period
People & Culture – Stronger as One ! • Critical appointments 2017
– Business Analyst
• Focus – Clarity & data modelling for critical decision making
– Scaffolding Engineer
• Focus – Innovation leadership t
– Paint industry sales leadership
• Focus – trade engagement
– National HR manager
• Focus – the right people in the right seats
– Establishment of a full time digital marketing resource
• End user engagement using formal and informal communications strategies
• Begin building e commerce capability
Slide 21
• Critical success factors 2018 & beyond
– Leveraging pool of talent
• Build internal network – sharing of ideas, expertise & project management.
– Building the correct mix of talent
• Organic and new opportunities
• Opportunity seekers as well as account managers
– Establishing skills matrix / review
• Individual development plans
• Establish weak points
• Training, & development
Events – Pro series launch… “Oldfields is Back!!”
Targets: Trade painters & store owners Paint buying groups Industrial buying groups Major painting firms Trade press Master painters NSW & VIC TAFE NSW & VIC
Sydney: October 31, 2017 Melbourne: November 2nd , 2017
Opportunities for 2018
1. Finding a lender that will support growth.
2. Re establishing Oldfields as the No.1 trade paint supplier …
3. Evolving our scaffold business into a true national network servicing both local and national clients in counter cyclical revenue streams
4. Allowing Treco to be established as a true on line business.
5. International opportunities – Predominantly Asia.
6. Leverage capabilities from improved analytics and greater insights
Slide 23
Slide 24 24
FY18 - CURRENT YEAR PROGRESS:
RICHARD ABELA
First Half Guidance
• Restructure consumer revenue base (no sales to Masters, termination of M10 warehouse supply, commence sheds on-line)
• National scaffold strategy to leverage network
• Invest in key roles & activity to drive future growth
• Continued debt reduction with focus on exiting DSLN
Slide 25
Key Financials H1 FY18 Guidance H1 FY17 Actual Growth
Net Revenue Circa $13,700k $14,344k -5% Scaf +10% / Cons -35%
EBITDA Circa $0.9m - $1.0m $1.1m -20%
NPAT Circa $0k $360k
Slide 26
ITEMS OF BUSINESS
Financial Statements & Reports
To receive and consider the following reports in respect of the financial year of the company ended 30 June 2017;
– The Financial Report (which includes the Statement of Financial Position, Statement of Comprehensive Income, Cash Flow Statement and Director’s Declaration); and
– The Director’s Report and Auditor’s Report
Slide 27
Resolution 1.
Re-election of Gregory John Park as a Director
“That Gregory John Park, who retires by rotation in accordance
with the Company’s Constitution and being eligible offers
himself for re-election as a Director, be re-elected as a
Director”
Slide 28
Votes received FOR (incl. Open to Chair) 57,310,622 Votes received AGAINST NIL Abstentions NIL
Total proxies received 57,310,622
Shareholder exclusions 75,000
Resolution 2.
Remuneration Report
“That the Remuneration Report be adopted”
Slide 29
Total proxies received 17,749,560
Votes received FOR (incl. Open to Chair) 17,749,650 Votes received AGAINST NIL Abstentions 45,000
Shareholder exclusions 39,516,062
Other Business
Slide 30
Disclaimer and Notes
• The purpose of this presentation is to provide general information about Oldfields Holdings Limited (Company). It is not recommended
that any person makes any investment decision in relation to the Company based solely on this presentation. This presentation does
not contain all information which would be material to the making of a decision in relation to the Company. Any investor should make
its own independent assessment and determination as to the Company’s prospects prior to making any investment decision, and should
not rely on the information in this presentation for that purpose.
• This presentation does not involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold
securities in the Company.
• This presentation contains certain statements which may constitute “forward-looking statements”. Such statements are only predictions
and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ
materially from those expressed, implied or projected in any forward-looking statements. No representation or warranty, express or
implied, is made by the Company that the matters stated in this presentation will be achieved or prove to be correct.
• Except for statutory liability which cannot be excluded, the Company, its officers, employees and advisers expressly disclaim any
responsibility for the accuracy or completeness of the material contained in this presentation and exclude all liability whatsoever
(including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this
presentation or any error or omission therefrom. The Company accepts no responsibility to update any person regarding any inaccuracy,
omission or change in information in this presentation or any other information made available to a person nor any obligation to
furnish the person with any further information.
End Notes
Earnings Before Interest Tax Depreciation and Amortisation. The reference to EBITDA is unaudited and unreviewed however is based on
amounts extracted from the audited financial statements and reconciles to the profile before and after income tax as reported in the
Consolidated Statement of Profit or Loss and other Comprehensive Income contained within the Company’s Financial Report and Appendix 4E.
Slide 31